UMass endowment to sell off holdings of fossil fuel industry
The University of Massachusetts endowment will sell off its fossil fuel holdings, officials announced Wednesday, marking a victory for advocates of divestment amid a nationwide surge of student activism in the fight against climate change.
The unanimous decision by the board of the UMass Foundation, which oversees the $770 million endowment of the five-campus system, affects direct investments made in fossil fuel companies. University officials have valued those holdings at about $5 million. The action does not include university-owned investment funds that have portfolios with stakes in fossil fuel.
UMass said the move to divest direct fossil fuel holdings is a first for a major public university.
UMass president Martin T. Meehan said in an interview the measure is a strong signal to the energy sector.
“We hope the message that they receive is that we need to find alternative sources and sustainable sources of energy,” he said. “It’s more about a statement of what the University of Massachusetts wants to stand for, and where we can have the direct influence is where we have direct investments.”
UMass students had been increasingly vocal about halting funding of the fossil fuel industry and had claimed a victory last year when the foundation agreed to shed direct holdings in coal companies.
This spring, students occupied a UMass Amherst administration building for days, and a total of 34 protesters were arrested as they pushed the foundation to expand divestment to cover oil and gas.
Kristie Herman, a leader of the movement who graduated this spring after fighting for divestment for three years, applauded Wednesday’s decision.
“We see this as a really amazing and important win not only for us and UMass but for the movement as a whole, because this sets a precedent,” she said. “It’s really empowering to see that with people and with community, you can actually make change, and you don’t have to wait.”
The UMass board of trustees will discuss the issue when it meets June 15, according to Chairman Victor Woolridge, who said in a statement he will recommend the board endorse the decision. But the endowment’s fund managers can begin selling off fossil fuel stocks now.
Activists have been rebuffed recently while making similar appeals in high-profile campaigns at other colleges, including Harvard and the Massachusetts Institute of Technology. In October, L. Rafael Reif, the MIT president, said he believed his institution would be better off maintaining industry ties.
MIT said it would instead embark on a five-year plan to confront climate change through research and education.
But several other schools, including Syracuse University and Hampshire College, have pledged to divest their fossil fuel portfolios.
Opponents of divestment believe such decisions could prove expensive.
A recent study by Arizona State University business professor Hendrik Bessembinder estimated that full divestment could cost an endowment between 2 and 12 percent of its value over 20 years.
The study, which was commissioned by the Independent Petroleum Association of America, a trade group, factors in the sale of indirect holdings in investment funds, which are not part of the action taken by UMass.
Nonetheless, Todd D. Kendall, an economist with Compass Lexecon who worked on the study, said UMass could be making a mistake by “excluding a major sector of the economy from the portfolio.”
He said divestment has “no real benefits in terms of affecting what oil companies do.”
Meehan said he believes the university is making a difference with its choice.
“It’s an important statement, and I credit the students for their efforts here,” he said. “Clearly, it’s symbolic, but I think it’s one of many things that the university is doing.”
Among the other actions he cited: UMass’s creation of a socially responsible investment option for donors, the use of environmentally friendly building practices, and research commitments such as the establishment of a UMass Boston doctoral program in green chemistry.
Lindsay Meiman, spokeswoman for the group 350.org, which has worked with climate-related divestment campaigns at many campuses, said UMass on Wednesday sent “an incredibly strong message that the momentum behind the global fossil fuel divestment movement is only getting stronger.”
“A huge goal of divestment is to continue the conversation around questioning where we get our energy from and where our institutions are putting their resources,” she said.
This story has been updated to include the total number of arrests from two incidents involving fossil fuel protesters at UMass.